OPT records $8M backlog for wave-energy devices

Pennington, N.J.-based Ocean Power Technologies (Nasdaq: OPTT) is operating with an $8 million backlog of orders as it focuses efforts during the next year on bringing its 150 kilowatt PowerBuoy into production.

Chief Financial Officer Chuck Dunleavy told the Cleantech Group that the company is responding to a fast-growing interest in marine power, in the U.S. within the last couple years and across Europe within the last five.

OPT released its earnings this week for the quarter ending Oct. 31, 2008, showing revenue of $0.7 million and operating losses of $5.4 million for the company’s second quarter. The company’s fiscal year runs through April 30, 2009.

Dunleavy said operating losses are higher and revenue lower than the previous quarter because OPT is focusing its efforts on building the PB150, a model that can achieve greater efficiencies than previous PowerBuoys to become cost-competitive with traditional energy sources when government incentives are included. The increasing capacity of OPT’s products (a 500-kW buoy is planned) is aimed at the $150 billion power-generation market, Dunleavy said.

"The PB150 is going to be our workhorseover the next couple of years," Dunleavy said. "We hope it will accelerate market penetration and gain wider acceptance to really help us crack into the power utility market."

Design of the PB150's structural elements is expected to be complete before the end of the calendar year. OPT is lining up components manufacturers with the expectation of production before the end of 2009.

A more niche product offering for OPT is the 40 kW PowerBuoy, which is capable of providing autonomous power for deepwater use in applications such as aquaculture, homeland security, offshore oil and gas, and hydrogen production. Dunleavy said the market is much smaller—about $1 billion—but the competition is more varied, with the PowerBuoys competing with energy sources such as solar, wind or diesel engines.

“It’s a smaller but important side of our business,” Dunleavy said. “We view it as an enabling technology for deepwater applications.”

That product is the source of a $3 million contract OPT signed this quarter with the U.S. Navy to power the Navy's Deep Water Active Detection Systems (DWADS) program, which uses sophisticated oceanic data-gathering and communications systems to track vessels (see Ocean Power Technologies, Navy sign $3M deal).

The 18-month contract followed a a $1.7 million deal with the Navy in June 2007 (see U.S. Navy considering OPT to power sensor network). OPT contracted with the Navy for ocean-data gathering in the company’s first deal after going public in April 2007 (see Ocean Power Technologies prices U.S. IPO).

OPT also signed a $2 million contract with the U.S. Department of Energy to deploy a PowerBuoy off the Oregon coast in the second half of 2009.

OPT builds its own proprietary power control system and generators for the PowerBuoys but contracts with manufacturers for some other components. The PowerBuoys are then assembled close to the site of deployment and sold as turn-key power plants. OPT also sells operations and maintenance contracts to support the units.

Dunleavy said that strategy makes the company’s growth less capital-intensive than companies seeking to earn revenue from energy generation, freeing OPT from the need to raise financing to take on big projects.

OPT is targeting North America, Europe, Australia and Japan as it focuses on wave-energy potential and markets where the company has established relationships with suppliers and manufacturers. The regions have favorable government incentives for marine power, making it a more-attractive option for energy developers, Dunleavy said.

In September, Ocean Power Technologies deployed its first PowerBuoy wave energy unit to Spanish utility Iberdrola. The buoy was the first in a string of 10 PowerBuoys planned for the 1.39-megawatt project located 3 miles off the coast of Santoña, Spain (see Ocean Power Technologies deploys Spanish wave unit).

In May, the company signed a joint development agreement to build a 10-MW wave power station off the coast of Western Australia, with a potential expansion to 100 MW (see Ocean Power Tech to build wave station in Australia).

Marine energy could deliver 10 percent of the world's energy needs, about 7 percent or 8 percent from wave energy and the remainder from tidal projects (see UK holds half of Europe's wave energy potential).

Across the globe, wave energy could produce 750 to 2,000 terrawatt-hours of energy a year, according to a recent study from industry analysts Frost & Sullivan. Such capacity would require an investment of £500 billion.

About six main technologies dominate the sector, with a few standout companies including OPT, Pelamis Wave Power and Aquamarine Power—all companies that have worked with utilities to get their technologies adopted, Frost & Sullivan noted (see Pelamis starts Portugal wave-power farm).

Dunleavy said OPT's technology has been tested in the water for 10 years and uses a proprietary electronic tuning capability to optimize power output as wave conditions change.

The company has 52 employees in the U.S. and UK but is looking to hire aggressively, particularly engineers with electrical, mechanical, hydraulics, or marine-deployment backgrounds, Dunleavy said. The company also wants to bulk up its staff in Australia and Japan.

Cleantech developments making news in the past 24 hours

• AES raises $1.58B with China Investment
• Patently unobvious

View the last week of cleantech developments here | Subscribe to full feed